 "Hindalco Q4 PAT hit by one-time provision")
Hindalco is yet another company to be struck by a one-time exceptional item in the March quarter. While the company's sales and operating income were largely in line with the Street's estimates, a provision of Rs 146 crore for its renewable power obligation hurt profit growth. Sales growth in the fourth quarter grew 11 per cent year-on-year and nine per cent sequentially to Rs 9,372 crore on higher volumes of aluminium and copper.
Despite higher metal volumes, Hindalco's operating income remained flat y-o-y at Rs 850 crore. Goutam Chakraborty, metals analyst at Emkay Global, says the company's performance is in line with estimates on higher volumes, though margins in the aluminium segment have contracted. Adjusting for the exceptional item, Hindalco's adjusted net profit was down 53 per cent y-o-y and 15 per cent sequentially to Rs 306 crore.
During the quarter, aluminium sales grew 14 per cent sequentially. However, the aluminium segment's earnings were down, as aluminium earnings before interest, tax (Ebit) margin was at 7.4 per cent, down 400 basis points y-o-y and 300 sequentially. Higher volumes ensured sales growth but lower realisations in the aluminium segment impacted profit growth. Revenues of the copper segment increased five per cent sequentially on higher volumes and margins remained flat despite demand conditions.
Despite weak performance of the aluminium segment and a one-off loss provision, analysts believe the stock price factors in all the negatives and a further fall is unlikely. Global commodity risks remain, but on the domestic front, there are fewer concerns. However, the fresh triggers for the stock will come from progress in the coal block and output from therein.
Despite higher metal volumes, Hindalco's operating income remained flat y-o-y at Rs 850 crore. Goutam Chakraborty, metals analyst at Emkay Global, says the company's performance is in line with estimates on higher volumes, though margins in the aluminium segment have contracted. Adjusting for the exceptional item, Hindalco's adjusted net profit was down 53 per cent y-o-y and 15 per cent sequentially to Rs 306 crore.
During the quarter, aluminium sales grew 14 per cent sequentially. However, the aluminium segment's earnings were down, as aluminium earnings before interest, tax (Ebit) margin was at 7.4 per cent, down 400 basis points y-o-y and 300 sequentially. Higher volumes ensured sales growth but lower realisations in the aluminium segment impacted profit growth. Revenues of the copper segment increased five per cent sequentially on higher volumes and margins remained flat despite demand conditions.
Despite weak performance of the aluminium segment and a one-off loss provision, analysts believe the stock price factors in all the negatives and a further fall is unlikely. Global commodity risks remain, but on the domestic front, there are fewer concerns. However, the fresh triggers for the stock will come from progress in the coal block and output from therein.